Automatic Data Processing’s Quarterly Earnings Preview: What You Need to Know

Roseland, New Jersey-based Automatic Data Processing, Inc. (ADP) is a global provider of human capital management (HCM) solutions, offering cloud-based payroll processing, human resources management, employee benefits administration, talent management, and tax and regulatory compliance services. With a market cap of $116 billion, the company serves businesses of all sizes across multiple industries, helping organizations streamline workforce management, automate payroll operations, and improve HR efficiency.

ADP is expected to release its Q1 2027 earnings on Oct. 28, before the market opens. Ahead of the event, analysts expect the company’s EPS to be $2.78 on a diluted basis, up 11.7% from $2.49 in the year-ago quarter. The company has exceeded Wall Street’s EPS estimates in each of its last four quarters.

For fiscal 2027, analysts project the company’s EPS to be $12.27, up 10.3% from $11.12 in fiscal 2026. Moreover, its EPS is expected to rise by roughly 9.2% year over year to $13.40 in fiscal 2028.

ADP stock has declined 3.7% over the past 52 weeks, underperforming the S&P 500 Index’s ($SPX) 15.2% rise and the State Street Technology Select Sector SPDR ETF’s (XLK) 30.8% return during the same time frame.

Automatic Data Processing has underperformed the broader market over the past year amid slowing organic revenue growth and modest workforce expansion, raising concerns about its near-term growth trajectory. 

However, its long-term prospects remain promising, underpinned by strong demand for cloud-based payroll and human capital management solutions. With annual sales growth of 7.9% over the past five years, $21.95 billion in revenue, and a robust 21.7% free cash flow margin, ADP is well-positioned to capitalize on continued demand for workforce automation while investing in innovation and delivering shareholder returns.

Yet, analysts are skeptical about ADP, with the stock having a “Hold” rating overall. Among the 19 analysts covering the stock, four are recommending a “Strong Buy,” 13 suggest a “Hold,” one recommends a “Moderate Sell,” and one suggests a “Strong Sell” for the stock. ADP currently trades above the average analyst price target of $288.35 and the Street-high price target of $322, indicating an upside of 9.3% from the current levels.

On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.